2019 (5) TMI 1174 - AT - Customs

Violation of import conditions - actual user condition - import of Hot Mix Plant Batch Type with Electronic Control and Bag Type with Filter Arrangement - it was found that just after the import, the said Hot Mix Plant were directly sent to and installed and used at Lonihkand Taluka, Haveli, Pune, instead of NHAI Project at Hyderabad - benefit of 21/2002-Cus dated 01.03.2002 (Sl.No.230) - HELD THAT - On perusal of the Letter of Acceptance dated 29.06.2005 of NHAI, we find that the contract was for balance work of 4 laning of Nagpur Hyderabad section and Hyderabad Bangalore section of NH-7, in the State of Andhra Pradesh. But it was found that the said contract had been sub-contracted to M/s Sew on 03.02.2007, prior to the date of filing the Bill of Entry. It is admitted by the appellant that after clearance of the goods from Mumbai Port, the same were transferred to Lonikhand, Pune, though the lorry receipts were issued for Hyderabad, to be utilised in construction of road projects awarded by Pune Municipal Corporation - The adjudicating authority observed that such Projects / Contract awarded by Pune Municipal Corporation would not qualify for duty exemption under the notification. The appellant had filed the Bill of Entry on 13.12.2007 for use of the machine at Nagpur - Hyderabad section and Hyderabad Bangalore section in the State of Andhra Pradesh. Hence, the letter dated 02.02.2007 of NHAI has no relevance in the present case - Admittedly, the appellant had violated / contravened the conditions of the notification and therefore, the adjudicating authority has correctly denied the benefit of notification. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Duty exemption under Notification No.21/2002-Cus dated 01.03.2002.
2. Violation of conditions of the exemption notification.
3. Denial of benefit of the exemption notification.
4. Confiscation of imported machine and imposition of penalties.
5. Appeal against the impugned order.

Analysis:

1. Duty Exemption under Notification No.21/2002-Cus dated 01.03.2002:
The appellant imported a "Hot Mix Plant" under a duty exemption notification for construction projects. The appellant claimed duty exemption under Sl.No.230 of the notification for a specific road project by NHAI in Andhra Pradesh. However, investigations revealed that the plant was diverted to a different project in Pune, violating the conditions of the exemption.

2. Violation of Conditions of the Exemption Notification:
The appellant failed to adhere to the conditions of the exemption notification by diverting the imported machine to a project not specified in the undertaking. The appellant transferred the plant to Pune Municipal Corporation instead of using it for the designated NHAI project in Andhra Pradesh. This diversion led to the denial of the benefit of the exemption and subsequent legal actions against the appellant.

3. Denial of Benefit of the Exemption Notification:
The adjudicating authority correctly denied the benefit of the exemption notification due to the appellant's non-compliance with the specified conditions. The diversion of the plant to a different project location invalidated the duty exemption claim, leading to the confiscation of the machine, imposition of fines, and penalties on both the company and its managing director.

4. Confiscation of Imported Machine and Imposition of Penalties:
The impugned order confirmed the confiscation of the imported machine with a redemption fine, demanded customs duty with interest, and imposed penalties on the company and its managing director. The penalties were based on the violation of the exemption conditions and the deliberate diversion of the plant to an unauthorized project location, as established during the proceedings.

5. Appeal Against the Impugned Order:
Both appellants filed appeals challenging the impugned order. However, after hearing arguments from both sides and examining relevant documents, the Tribunal upheld the impugned order. Citing precedents and the appellant's failure to comply with the exemption conditions, the Tribunal dismissed the appeals, affirming the denial of duty exemption and associated penalties.

In conclusion, the Tribunal's decision was based on the appellant's non-compliance with the conditions of the duty exemption notification, leading to the denial of benefits and imposition of penalties as per the law.